Electronic communications networks gained market share of Nasdaq trading volume for the seventh consecutive quarter, according to an institutional research report by J.P. Morgan H&Q.
At the end of the third quarter, share volume handled through ECNs jumped to a record 47%, up from 45% for the second quarter this year and 35% for the third quarter of 2000. According to the report, institutional demand for direct-access trading is "perhaps the most profound trend helping ECN volume growth.” Gregory Smith, J.P. Morgan analyst, said ECNs are benefiting from the increased focus on transaction costs, the growing presence of direct access trading vehicles and the compounding effect of liquidity.